Aug 7 (Reuters) - EBay Inc (EBAY.O), once a scrappy auction
site for mom and pop sellers, is enticing some of the world's
largest retailers by arguing it can help them compete better
against e-commerce leader Amazon.com Inc (AMZN.O).

EBay Chief Executive John Donahoe and other executives have
been telling retailers that Amazon is their enemy, while eBay is
a friend because, unlike Amazon, it holds no inventory.

Amazon buys products wholesale, stores them in inventory and
sells them to consumers at higher prices – like all retailers.
EBay says it just matches buyers and sellers.

That message is sinking in, especially among brick and
mortar retailers that are losing market share to Amazon.

"As retailers look for new vehicles for growth eBay becomes
a natural partner – a better partner than Amazon," said
Sucharita Mulpuru, an e-commerce analyst at Forrester Research.

When RadioShack Corp RSH.N reported a surprise quarterly
loss last month, Chief Executive Jim Gooch told analysts that
the electronics retailer had set up an eBay storefront to help
the company reach new customers online. [ID:nL2E8IP2VI]

On Monday, eBay said it was testing a same-day delivery
service called eBay Now with Target Corp (TGT.N), the
second-largest U.S. retailer, and other big retailers including
Macy's Inc (M.N), Nordstrom Inc (JWN.N) and Walgreen Co WAG.N
[ID:nL2E8J65W0]. Amazon offers same-day delivery in some areas
already.

The foundations of eBay Now rest on Milo, a start-up eBay
acquired in late 2010 which lets merchants upload in-store
inventory onto eBay's online marketplace. When shoppers search
on eBay now, they see what online sellers are offering, but also
which nearby physical stores carry the product.

More than 50,000 stores in the United States have uploaded
inventory to eBay, via Milo, including major retailers Home
Depot Inc (HD.N), Ikea, Lowe's Companies Inc (LOW.N), Sears
Holdings Corp (SHLD.O) and J.C. Penney Company Inc (JCP.N).

"It's simple: location, location, location," said Ben
Schachter, an analyst at Macquarie. "Sellers have to go to where
the buyers are."

EBay has more than 100 million active shoppers on its online
marketplace, he noted.

"Retailers don't have those kinds of numbers coming to their
sites and buying," Schachter said. "They would love to only sell
through their own site, but they have to go where the buyers
are, and many are on eBay."

'WORST-KEPT SECRET'

Amazon has a lot more active customers - about 180 million -
but some retailers steer clear still.

Barnes & Noble, which has been hammered by Amazon, has had
an eBay storefront since late 2010 and mostly uses it to sell
refurbished Nook gadgets. Toys and books were added in May 2011.

"EBay has been an exceptional partner, working with Barnes &
Noble to effectively promote Nook to its massive user base,"
said Barnes & Noble spokeswoman Mary Ellen Keating. "Amazon is a
competitor. We don’t sell on Amazon and have no plans to do so."

Toys "R" Us does not sell on Amazon either. More than a
decade ago, the largest toy retailer had exclusive rights to
supply some toys on Amazon's website. That partnership ended in
litigation and Amazon is now a leading toy retailer in its own
right.

"It's the worst-kept secret in the retail industry," said
Mulpuru. "When you partner with Amazon, they are looking at your
data, learning your business and have ambition to get into every
category."

Among the 100 largest retailers in the United States, most
are choosing eBay over Amazon, according to Scot Wingo, chief
executive of ChannelAdvisor, which helps merchants sell on both
online marketplaces.

An Amazon spokesman declined to comment.

Amazon’s marketplace for third-party sellers is growing
rapidly and Wingo said that would not be happening if all
retailers thought Amazon was the enemy.

The lure of Amazon's massive customer base is still powerful
for many.

"We take any chance of getting new eyeballs and Amazon is
just so large in the world of e-commerce," said Jerry Deboer,
senior vice president of marketing at Jos. A. Bank JOSB.O,
which has Amazon and eBay stores.

RadioShack also has both, and big retailers including Office
Max OMX.N and Sephora run Amazon stores.

Adding large sellers to eBay's marketplace helps the company
in several ways.

EBay takes a cut of sales, so higher-volume sellers may help
the company generate more revenue and profit.

EBay and retailers declined to discuss fees. However, eBay
charges less for top sellers and negotiates individual deals
with the biggest and best, according to Wingo.

EBay has struggled in the past because some of the products
on its site were listed poorly or of questionable quality, and
customer service from small sellers is not always what it could
be. Big retailers are more likely to sell higher-quality
products, categorize them more and provide better service.

DIFFERENT SHOPPERS

Retailers say eBay storefronts attract different shoppers
than the ones who come to their own websites and physical
stores.

EBay shoppers often search for deals, so some retailers use
eBay to sell end-of-season or outlet products at lower prices.

EBay provides data to retailers to help them check if the
shoppers who come to their eBay storefronts overlap with their
existing customer base, according to Michael Jones, vice
president of merchant development at eBay.

"By and large, people see this as a very significant
incremental channel for them," Jones said.

In early 2010, eBay started including storefront inventory
in results when shoppers searched on the website's front page.
That has helped retailers place their products in front of more
consumers, according to Jones.

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